THE EFFECT OF TAX ADMINISTRATIVE BURDEN ON ENTREPRENEURSHIP: THE CASE OF THE ASIA-PACIFIC COUNTRIES
Vol. 130 No. 5B (2021), Original Article
Vol. 130 No. 5B (2021)

THE EFFECT OF TAX ADMINISTRATIVE BURDEN ON ENTREPRENEURSHIP: THE CASE OF THE ASIA-PACIFIC COUNTRIES

Original Article
https://doi.org/10.26459/hueunijed.v130i5B.6492
Published 2021-11-18
Pham Hoang Cam Huong
University of Economics, Hue University
Le Thi Nhat Linh
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Keywords

compliance cost
entrepreneurship
principal component analysis
tax administrative burden

Abstract

The objective of this paper is to analyze how tax administrative burden influences entrepreneurial activity in the eight Asia-Pacific economies during the period 2011–2019. In this study, we use the Principal Component Analysis (PCA) to produce the tax administrative burden which are characterized by the number of tax payments per year and the time to pay taxes in hours per year. By controlling for the effects of macroeconomic conditions, the empirical results indicate that tax burden cost has a significant and negative influence on the Entrepreneurial Intention, Nascent Entrepreneurship rate and Established Business Ownership Rate (EBO) in the Asia-Pacific economies. In other words, when firms have generated revenue, an increase in tax compliance cost is an important factor that hinders business activities, especially at the beginning stages. Notably, the findings indicate that the impact of tax burden varies among different stages of entrepreneurial life cycle. Upon the implications for these countries, we also desire to deliver useful lessons for the future development of entrepreneurial activities in Vietnam, especially in the presence of the Covid-19 pandemic that shakes the world.

https://doi.org/10.26459/hueunijed.v130i5B.6492
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